Forexpros – Copper futures trimmed losses in thin trade on Thursday, but remained close to a one-week low as markets remained jittery ahead a closely-watched Italian bond auction later in the day.
On the Comex division of the New York Mercantile Exchange, copper futures for March delivery traded at USD3.361 a pound during European morning trade, slipping 0.13%.
It earlier fell by as much as 0.95% to trade at USD3.325 a pound, the lowest since December 20.
With most investors already away on year-end leave, trading volumes were thin, resulting in tight liquidity conditions and irregular volatility.
Italy was scheduled to sell EUR8.5 billion of long-term debt maturing between 2014 and 2022 later Thursday
The auction is seen as the first test of European banks’ willingness to purchase long-term sovereign debt of distressed euro zone countries, following last week’s nearly EUR500 billion cash infusion by the European Central Bank.
Ahead of the auction, the yield on Italy’s ten-year bonds traded at 7.08%, above the 7% threshold widely viewed as unsustainable in the long-term.
Europe as a region is second after China in global demand for the industrial metal and worries over its economic growth have kept copper prices under pressure in recent weeks.
A broadly stronger U.S. dollar also weighed, as the euro traded at a one-year low against the greenback, while the dollar index hovered close to the highest level since January.
However, prices continued to draw support from news that union workers at Freeport McMoran Copper & Gold’s Grasberg mine in Indonesia halted their return to work earlier in the week, following a three-month strike, pending the resolution of a local labor dispute.
The delay in the return to work will push back the resumption of full operations of the world’s second biggest copper mine. In 2010, Freeport sold 1.2 billion pounds of copper from Grasberg.
The company, which is the world’s second largest copper producer, said earlier in December that it expected to lose nearly 100 million pounds of copper output this year due to the strikes after production at the Grasberg mine fell 15% in the first nine months of 2011 from the same period a year earlier.
Copper prices have lost nearly 25% since the start of 2011 as a deepening euro zone debt crisis and fears over a ‘hard landing’ in China pushed investors to liquidate assets such as industrial metals.
Elsewhere on the Comex, gold for February delivery fell 0.79% to trade at a three-month low of USD1,551.75 a troy ounce, while silver for March delivery dropped 0.95% to trade at USD26.97 a troy ounce, also a three-month low.
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